Too Early to Declare Victory Over Inflation 

Apollo Chief Economist

Inflation today is 8.5%, and the consensus expects inflation at the end of this year at 7.3%. Inflation may have peaked, but these numbers are all unacceptably high for the Fed.  

The implication for markets is that the Fed will not turn dovish anytime soon. The Fed’s inflation target is 2%, and the FOMC will continue to raise interest rates and keep them elevated until there are clear signs inflation is coming down to 2% even if this requires a slowing in corporate earnings growth.  

The bottom line is that it is too early to declare victory over inflation, and we don’t know yet how much Fed tightening and lower earnings growth are going to be needed to get inflation all the way down to 2% again. 

Inflation coming down but still meaningfully above the Fed's 2% target
Source: BLS, Haver Analytics, Apollo Chief Economist

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